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Retail rides out UK recession

By DEBBIE HATHWAY
Job seekers, home makers and business owners are faced with an unrelenting stream of contradictory reports regarding the state of the UK economy and its potential for recovery from the global recession. Perhaps there is merit in switching off the news as one pundit recommends; thinking positive and focusing on the present instead of dwelling on past mistakes or panicking about the future.
For starters, it’s not all doom and gloom in the retail sector as consumer spending is on the rise thanks to falling utility bills and mortgage costs, which are creating more disposable income.

Debenhams to create UK jobs

Sparked by the financial crisis in the US, the job market has steadily worsened, credit has tightened and consumer spending has slowed, stifling economies around the world.
As if that weren’t bad enough, the “recent outbreak of swine flu in Mexico and its rapid spread to other countries could interrupt trade and investment, exacerbating the worldwide recession for an uncertain period," said research firm Moody's Economy.com. Renamed H1N1 flu, the virus has the potential to affect jobs in tourism, entertainment and travel; these industries are already suffering from the effect of the current economic crisis.
Pharmaceutical and wellness companies, however, could reap the benefit of people playing safe and buying anti-flu products. Meanwhile, analysts and governments are desperately seeking signs of recovery in both the financial and health environments.
RTTNews reported that the UK’s gross domestic product (GDP) contracted 1.9 per cent on a quarter-on-quarter basis early 2009, compared with a decrease of 1.6 per cent in the fourth quarter of 2008. The Office for National Statistics said it was the biggest quarterly decline since the third quarter of 1979, due to weaker services and production output.
But, Debenhams has good news for the retail sector with sales growing for the first time in 18 months and headline pre-tax profits increasing by 10.7 per cent to £104.2m for the 26 weeks ending February 2009 – about £ 10m higher than forecast and despite a very volatile festive season trading period. The company, which operates 153 stores in the UK and Ireland, plans to open nine stores over the next two years, which will create 1 800 jobs in retail.
Other retailers like Primark and Burberry have also reported stronger trading conditions but analysts say it’s too early to indicate the tail end of the consumer downturn.

Manufacturing meltdown

Output in the manufacturing sector continues to decline, according to the latest Confederation of British Industry (CBI) quarterly industrial trends survey, which shows production in the first three months of 2009 falling at its fastest rate since 1975. It says some 60 per cent of manufacturers reported declining orders as domestic demand plummeted to levels not seen since 1980 and job opportunities declined most rapidly since October 1991. This is expected to slow slightly during the current quarter.
TimesOnline reported CBI statistics that showed car manufacturers among the hardest hit, with 90 per cent working below capacity, compared to 37 per cent in October. Manufacturers of building materials and household goods have suffered through the stagnation of the housing market. The CBI said 66 per cent more companies making furniture, upholstery and bedding expect their order books to shrink.
With about 62 000 manufacturing jobs lost in the first quarter this year, according to the survey, and another 51 000 to go by the end of June, Barclays Bank chief executive John Varley believes the recession will last at least another year. Others say it will be two years. Chancellor Alistair Darling is predicting economic recovery from later this year, accelerating in 2010. In his second Budget, he announced a further cut in the growth rate of annual spending, demanding £15 billion in Whitehall efficiency cuts.
A report in The Times explained that these will include “£200 million to help Britain… push the growth of wind turbines, hydro-electric power and other renewable energy technologies” and “£2 billion to help people without jobs (under-25s who have been jobless for more than a year will be guaranteed a job, work experience or training).” It said anticipated efficiency savings of £5 billion by 2011 and a further £10 billion over the ensuing three years would have huge implications for public sector jobs as “back office” functions are pared back. The Ernst & Young ITEM club also predicted a recovery in a year’s time but only after unemployment rises above three million. That’s not far off the CBI’s estimate of a 3.25 million peak in 2010.

US job market still bleeding

Washington, DC’s The Economist reported in September that the US economy had lost 159 000 jobs, the most in a month since 2003. It said car sales dropped to a 16-year low as potential buyers were denied credit and manufacturing was extremely weak. IMF figures released in October showed that GDP shrank in major euro currency zones Germany, France and Italy while Spain’s barely grew. Japan was also looking weak.

London still a job seekers’ hub

In the UK, job prospects in London are four times higher than neighbouring locations with the most opportunities: Surrey, Berkshire and Hampshire. Other areas were miniscule in comparison. Job vacancies online totaling close to 13 000, not restricted only to Britain, but listed across 38 industry sectors on the careers and jobs UK website, show tremendous opportunities in IT, management, engineering and manufacturing. If you’re looking to enter the job market and don’t have the skills to enter any of these sectors, it’s time to get extra training even if it means a complete career change.
Forget about entry into the fashion, art and design or sports and lifestyle sectors just yet. They show the least amount of opportunity. As far as location is concerned, it’s the counties that are trailing – County Londonderry, County Armagh, County Fermanagh and County Tyron had less then 10 jobs advertised.

Caravanning sector could create jobs

The average UK consumer is expected to continue to cut back on spending by cutting up credit cards, reducing impulse buys and becoming more frugal. In many areas, spending is still happening. It’s just that the pattern has changed.
A survey by market analyst Buckingham Research revealed that families, couples and singles were opting for home-cooked meals as opposed to eating out and were spending less time, if any, in pubs. However, McDonalds reported its best year ever in 2008, serving 2.5 million UK customers per day and growing ice cream sales, showing the product’s value as an inexpensive feel-good treat.
When it comes to holidays, British vacationers are opting for low-cost getaways. According to Reuters, the Caravan Club has increased bookings by 40 percent compared to this time last year. It stated that the sector’s growing popularity could see new jobs for additional staff to cope with demand.
Philip Stephens of the Financial Times sums up the steep fall in interest rates, the collapse in oil and other commodity prices, and lower taxes as raising the spending power of those in secure employment. “We need to look to the United States for the early signs of recovery. The cuts in US interest rates and Barack Obama's trillion dollar stimulus package amount to a wall of money.”
He said, “The big mistake during the good times was to take it for granted that they would go on forever; the risk now is that we will repeat the error by assuming that the economy will never escape from slump. It will.”